Packing costs increased during the 1980-81 season, with the great-
est increases shown in other direct and indirect operating expense.
Packing costs for two 4/5-bu. cartons of Florida oranges and grapefruit
were estimated at $3.65 and $3.57, an increase of 24.8 and 23.3 percent
above 1979-80. Tangerine and tangelo packing costs for two 4/5-bu.
cartons were estimated at $5.18 and $4.33, an increase of 38.5 percent
for tangerines and 27.0 percent for tangelos. The 1980-81 estimates
were based on accounting information obtained from 22 Florida packing-
houses.

We wish to express our appreciation to the participant packing-
houses for their excellent cooperation, and to Mrs. Theresa Zerr and Ms.
Gwen McCann for their clerical and secretarial assistance.

ABSTRACT

Packing costs increased during the 1980-81 season, with the great-
est increases shown in other direct and indirect operating expense.
Packing costs for two 4/5-bu. cartons of Florida oranges and grapefruit
were estimated at $3.65 and $3.57, an increase of 24.8 and 23.3 percent
above 1979-80. Tangerine and tangelo packing costs for two 4/5-bu.
cartons were estimated at $5.18 and $4.33, an increase of 38.5 percent
for tangerines and 27.0 percent for tangelos. The 1980-81 estimates
were based on accounting information obtained from 22 Florida packing-
houses.

Packing costs for two 4/5-bushel cartons of Florida oranges and
grapefruit are estimated at $3.651 and $3.57, respectively, for the
1980-81 season. The estimates are 24.8 and 23.3 percent above 1979-80
season estimates. Tangerine packing costs for two 4/5-bushel cartons
are estimated at $5.18, up 38.5 percent from previous season estimates,
and the cost to pack two 4/5-bushel cartons of tangelos was $4.33, an
increase of 27.0 percent.

Packing costs increased during the 1980-81 season, with the great-
est increase shown in other direct and indirect operating expense.

The 1980-81 estimates are based on accounting information obtained
from 22 Florida packinghouses.

IBeginning with the 1975-76 season, tangelo packing costs were
reported separately from orange packing costs. This change in reporting
will cause packing costs for oranges to increase relatively less than if
tangelo packing costs had continued to be included in oranges. This is
predicted on information in this report which shows average tangelo
packing cost to be greater than average orange packing cost (Table 4).

R. CLEGG HOOKS is an assistant in food and resource economics.

fruit shipments [2]. As indicated in Table 1, the sample firms provided
information on a total of over 25.2 million boxes (including elimina-
tions and direct-to-cannery fruit) or 10.8 percent of total Florida
citrus production [2, p. 8].

The distribution of firms by size category shown in Table 2 indi-
cates that the proportion of existing larger firms represented in the
sample is greater than the proportion of smaller firms in the sample.
The average volume packed per packinghouse for all 147 Florida packing-
houses operating during the 1980-81 season was 194,640 equivalent 1 3/5-
bushel boxes [2], while the average sample packinghouse packed 355,682
equivalent 1 3/5-bushel boxes. This was 66.0 percent of the total
volume that went through houses with the balance composed of elimina-
tions (Table 3). The number and type of firms in the sample are res-
tricted by availability of accurate data and firms' willingness to
provide information.

DATA COLLECTION

Most of the firms provided information from their auditors' per-box
cost analysis reports. The average costs of packing the more important
containers reported by the sample firms are shown in Table 4.

For those firms that did not allocate costs to different types of
fruit or packages, per-box cost distributions are based on information
provided by houses that keep more detailed records. Quite often audi-
tors' reports did not show labor costs categories and it was necessary
to distribute per-box labor costs into the categories shown in the
following tables. Again the labor costs distribution was based on
information available from packinghouses showing costs for each labor
category.

In general, the firms tended to use similar methods for allocating
materials, general and administrative, and selling expenses, but labor
and other direct operating expenses were allocated by various methods.

Two different auditing philosophies were reflected by the labor and
direct operating cost allocations shown in the auditors' reports. One

5 East Coast packinghouses
Packed fruit
Cannery fruit through house
Total through house
Direct, grove-to-cannery
Total

17 Interior packinghouses
Packed fruit
Cannery fruit through house
Total through house
Direct, grove-to-cannery
Total

22 packinghouses
Packed fruit
Cannery fruit through house
Total through house
Direct, grove-to-cannery
Total

2,474,259
647,047
3,121,299
688,398
3,809,697

5,771,123
3,153,518
8,924,641
12,387,211
21,311,852

8,245,382
3,800,558
12,045,940
13,075,609
25,212,549

aGrove-to-cannery fruit data were not obtained from 12 houses; had
these been included, it would have increased the volume going directly
to cannery. Two firms did not supply information on eliminated fruit.

bCannery fruit through the house is fruit with acceptable internal
quality but does not meet fresh market size or external appearance
standards. Cannery fruit through the house is often called eliminated
fruit or eliminations.

_I___ __ __ _____ ___ ___

Table 2.--Distribution of the sample packinghouses by total volume
packed compared with the industry distribution of firms in
Florida by total volume packed, 1980-81 season
-~~~. =z==,=m ~"~=`n""P"' U'

Table 3.--Percent of total fruit received which was packed for shipment
by kind of fruit and packinghouse location, 20a packinghouses,
1980-81 season
East Coast Interior All
Kind of Fruit
houses houses houses

philosophy is based on the premise that all labor and other direct oper-
ating costs should be allocated to the packed fruit. The other philo-
sophy is based on the premise that at least some of the direct operating
costs (unloading, grading, etc.) should be borne by the eliminations.2

Of the 22 firms in the sample, 12 firms supplied information
consistent with the first philosophy, 8 firms supplied information
consistent with the second philosophy and two firms did not report
eliminations handling costs. No corrections or adjustment of either
auditing system was made so that the averages shown in the following
tables reflect both auditing philosophies. The procedures used in
calculating the averages shown in this report are the same as those used
in previous reports in this series.

The weighted average costs of packing and selling Florida citrus in
various types of containers are presented in Tables 5, 6, and 7.
Detailed costs are shown for only the more important containers listed
in Table 4. Costs for the 4/5-bushel fiberboard carton for Interior and
East Coast houses are shown separately.

The costs shown are the weighted average costs for the sample
packinghouses, i.e., the total monetary costs of each item for all
houses were divided by the total number of boxes packed. The use of
weighted averages tends to result in a lower estimated cost than would

2Eliminations are fruit intended for fresh use but not packed
because of exterior appearance or size. Most eliminations are sent to
processing plants.

Table 5.--Weighted average costs of packing and selling Florida orangesa per
1 3/5 bushel equivalent by type of container, 1980-81 season

the simple average because larger houses, which usually have lower
costs, influence the average more than smaller houses.

Not all of the houses pack every container listed in Table 4. The
cost estimates presented in Tables 5, 6 and 7 are weighted averages for
the firms packing that container. Because the sample houses and weights
(volumes) change with each container, some of the cost differences among
containers can be attributed to the composition of firms packing each
container. The costs of handling and selling bulk fruit are shown in
Table 8. The weighted average costs allocated to eliminations are shown
in Table 9.

COST TRENDS

Changes in the reported costs of packing oranges and grapefruit in
two 4/5-bushel cartons from the 1979-80 to 1980-81 season are shown in
Table 10. Total packing and selling costs for oranges and grapefruit
increased 24.8 and 23.8 percent. This large increase in total packing
costs must partially be attributed to the freeze which occurred during
this season. Specifically, material costs and labor costs increased
10.2 and 21.0 percent for oranges while increasing 12.5 percent and 29.7
percent for grapefruit. Other direct operating costs and indirect
operating costs increased more dramatically 40.8 percent and 48.6 per-
cent for oranges and 36.3 percent and 29.5 percent for grapefruit.

Trends in orange and grapefruit packing costs for the past 12
seasons are reported in Table 11. In general, packing costs have
increased over time including 1980-81.

The relationship between average packing costs and the average FOB
value of packed fruit for two 4/5-bushel cartons of oranges and grape-
fruit in the Interior and East Coast regions for the past 13 seasons is
shown in Table 12. The changes in the ratio have been cyclical. The
value of fruit has shown greater variability than costs which have
tended to increase over time.

This public document was promulgated at an annual cost of $202.91 or
$0.18 per copy to report citrus harvesting research results to county
agricultural directors and firms and agencies in the citrus industry.